Solving the Problems of the Carrier
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Making a Claim for Loss of Use
A Problem that Should be Simple but which, Because Hauliers Seldom Have to Solve it, Assumes a Complicated Character
IHAD a telephone inquiry the other day which at firs-, seemed rather puzzling. The inquirer, first of all, asked for the standing charges relating to the use of a 21-ton lorry.
When I had ascertained that he meant a lorry of 21 ton., pay-load and not one of 21 tons unladen weight—experience has shown me that it is necessary to get this right at the start because so many usprs are confused in their minds as to the application of the terms—I gave him -the figures of 12s. per week for tax, -15s. per week for insurance. 7s. 6d. per week for garage rent, and 5s. for interest on first cost, a total of £1 19s. 6d. per week, exclusive of wages which I said he could best obtain by reference to his own records. He said that he did not-want to include wages, anyway, but he was perturbed that the amount quoted for standing charges was so small.
This was when the conversation began to puzzle me, for I could not quite understand a man objecting to the amount of his standing charges being small. Then I had another idea; possibly, I, thought, there is another element of confusion here, and that he is confusing standing charges with establishment .costs. So I asked him if he meant standing charges or did he mean overheads.
His answer came in what,I took to be a relieved tone, and he said: " Oh yes, it is overheads I mean." Whereupon
told him that an average figure for the overheads, or establishment costs would be about 30s. per week.
Apparently, we were going from bad to worse, for he was more disappointed with the 395. per week than he was with the 39s, 6d.. as he wanted to know if that was all. So I told him that in the case of a vehicle of that size I usually reckoned about 12s. per week per ton of pay-load, making 30s. for his 21 tons.
Factors to Remember When Drawing up a Claim So, with some idea of solving the mystery, 1 said: "What do you want the information for? " and with his reply came enligntenment. He told me that he was making a claim for loss of use of a lorry arising from an acciiient.
"In that case," I said, "you want to add your standing charges to your establishment costs, and you should also include something for depreciation. Depreciation I assess at £2 10s. per week."
Well, that brought the amount up to £5 19s. 6d., but I gathered that he still Was not sure that he had got the information he wanted.
" Don't I add something for loss of profit? " he asked So I told him that he should most certainly do so but, as he was an ancillary user, it was not going to be easy for me to give him a figure. I asked him if he had at any time hired a vehicle to do the same vfrork, but apparently he had not. The vehicle had been out of service for four weeks, and he had not been able to hire another to replace it. The driver had been put to some other work, hence the absence of any claim for his wages.
I eventually suggested to him that he made an estimate of 13 per week as the value of the vehicle to his company. It might be a good deal more than that, but £3 was a likely figure. That brought the total up to £8 19s. 6d.. and he seemed content with that. I gathered that he had something like £10 per week in. his mind, but did not know how to make it up.
The conversation reminded me that this problem of claiming for loss, consequent upon a vehicle being incapacitated, is not an easy one. Operators do not understand it, probably for the reason that it is, so far as the individual is concerned, a comparatively rare event, and one in which he has had no previous experience.
I have had many inquiries on 'the subject in my time,
'and I recall, too, that most of them are of the same type as this telephone inquiry. I remember, in particular, one case where I went with an operator to see his solicitor about a claim of this kind and, to my amazement. I found that the solicitor was even more ignorant .of the.elementary facts of the matter than any haulier possibly could be. He interpreted it as a claim for loss of profit, and that interpretation, or description of the claim, was the beginning of all the trouble. It is most definitely not a claim merely for loss of profits, as I propose to show. Even now I cick not know what the legal term is, but my description of it would be as already mentioned: loss due to lack of use by the vehicle, brought about by its being incapacitated, and the amount of any such claim is much more than. the bare loss of profit.
Loss of Profits Only Part of Recompense Needed But to return to our solicitor friend. I told him at once that we were not claiming only for loss of profits. but in addition for recompense for a considerable expenditure Unavoidably incurred while the vehicle was out of commission.
"That sounds as though it might be rather a considerable sum," he said.
" I don't know about it being a considerable sum," I replied, " but it is certainly much more than what would be covered by the term ' loss of profits.' " Will you give me some idea of what you have in mind," he asked. •
" My friend would want his administrative and establishment costs covering, he would want recompense for the amount of licence and insurance fees and garage rent, and so on, which still have to be paid. although the vehicle is not there.
" But I really don't see," he objected, " that we can. ask for all that,"' Although he was supposed to be representing my haulier friend, it was a difficult matter to get him to appreciate our point of*view.
" Supposing your office was burned down," I said. "and you could not obtain other accommodation for four weeks and were unable to go on with your business. What would you claim? "
" I should claim," he said hesitatingly, " for the total amount of the fees I should probably have earned.for that period."
" Precisely," Ianswered, "that is what I am advising my friend to do, claim for the gross amount he would have earned if the vehicle had been at his 'disposal, but, in our case, we should make some allowance for expenditure • not incurred, such as cost of petrol, oil and tyres, and so on, which would have been necessary had the vehicle been running, and that, among the other things, would include our loss of profit."
It was still plain that he could not get our meaning, so I asked him: " What do you regard as your "net profits, if I may use the term ' profits ' in connection with the profession of a solicitor? " "
Well," he said, " I suppose they are my fees, less the wages I pay my clerical staff, the rent of my office, heating and lighting and other expenses—Oh," he suddenly remarked, "now I begin to see your point: what you mean is that these expenses are running on, you are getting nothing in return; and you want to be reimbursed for what you have had to spend in the .meantime."
" Exactly," I said, " That is just what we do wish to claim."
" In that case," he said. "can you give me some idea of what this expense is? "
As I had come prepared with such of that information as I could obtain from my haulier friend, I was able to give him the details for which he asked in the first place, although, as will presently become clear, it wasn't exactly what was required.
I should, first of all, explain that my friend had six vehicles-four 15-tonners and two 10-tonners. It was one of the 10-tonners which had been pat out of commission for a matter of some weeks-the period is not of any great consequence at the moment. Fortunately for me, too, he was in the habit of keeping fairly accurate costs records. For example, we were able to get at his establishment costs right away, and these are the figures which we showed to the solicitor.
Arrivingat the Yearly
Cost for Overheads
Overheads per annum: office rent and rates, £156; wages and salaries, £2,542; sundry expenses, including stationery, £232 3s. 8d.; telephone account, £219 5s. 2d.; gas and electricity, £56 Ss. Ed.; postage, £40 10s.; depreciation of office furniture and fittings, £14; total, £3,260 2s. 4d. That is equivalent to £62 14s. per week calculated to the nearest
He had, altogether, 30 tons pay-load, so that the actual amount of his establishment expenses per ton pay-load per week was 15s. 8d. (this is interesting as confirming the figure which I have so often quoted. This operator is in the London area, operates comparatively simply, and is mostly engaged in trunk services). The allocation of establishment charges per week for this 10-tonner, therefore, amount to £7 16s. Sd.
We then set out for this solicitor a statement of claim for all the various items of expenditure which still continued to be incurred, although the vehicle was not being used, and here is the statement we made with that object in view: Establishment charges, £7 16s. 8d.; tax, £2 4s.: insurance, £1 Es.; interest on capital outlay, £1 14s.; garage rent and rates, 12s. 6c1.; obsolescence, £4; wages, £4 18s.; employees' insurances, 4s.; total, £22 17s. 2d.
It should be observed, here, that the full amount of the driver's wages was included, because it was impracticable to give him any other employment, and it would not have been right, or even advisable, to have put him off for the period during which the vehicle was incapacitated. Well, the solicitor accepted all those figures, and we told him that, in addition, we should claim for £10 per week profit.
" What," he said, " RIO a week profit on an expenditure of £22. Surely that is excessive? "
" That £22," I answered. " is not a complete statement of expense in which the operator is involved when the vehicle is operating. There is probably something like another £12 or more to go on to that for petrol, oil, tyres and repairs."
" Even so," be said, " I am afraid we shall have to have something more definite than an estimate like that of £10 per week."
The Proper Basis on which
the Claim Should Be Made
Here we were again nonplussed, until I came to the conclusion that we had better tackle the whole problem from an entirely different angle, and I suggested to him that I had better get out the figures which would give the information which I had already suggested should be the proper basis for the claim, namely, total earnings, normally to be expected, less those items of expenditure which were not being incurred at the moment.
To that he agreed, and what we did was to take out figures for the total earnings of that particular vehicle during the period covering some three or four months corresponding to that of the current year in which the accident had occurred.
Going through the books we found that the average profit per week over that particular period was £45 10s. From that total we deducted corresponding average figures for expenditure as follow; fuel oil, £5 2s. 6d.; lubricating oil, lls.; tyres, £3 6s.; repairs, £4 2s, Ed.; total, £13 2s.
The figures for tyres and repairs were not the actual amounts expended during the period, but were those which my friend had found applied over long periods in con A28
nection with the oper ion of this particular vehicle. In taking that course he was, as will be realized, following the procedure which I have so often recommen41 and which is laid down in The Commercial Motor "'Tables of Operating Costs, na ely, covering expectation of tyre wear and expenditure os repairs as well as that which had actually been spent, rin other words, he -was providing for contingencies reaso ably to be expected in the way of heavy bills for tyre r placement and engine and chassis overhauls which, perhaps, up to that time of the vehicle's existence, had not been incurred.
We subtracted that £13 2s. from the £45 10s, average earnings and put forw rd a claim for £32 Es. per week. Incidentally, this show that the approximate estimate of £10 per week profit a s really not far out. Subtracting the total of £22 17s. 2.. of unavoidable expenditure from this figure of £32 8s. gives £9 10s. 10d. as being the actual average profit earned during the period under review.
At any rate, we wer able to satisfy the solicitor that,
in those figures, he h something on which to base his case, SOMO actual dat about which there could be no dispute; these figures re resented facts:
That case set for m a standard method of procedure which I have since foll ved whenever any claim for alleged loss of profits, loss of use, or any of the various names which are given to suc proceedings, has been put up to me for consideration.
It is not easy to ap ly the same principles to a similar claim by an ancillary ser who does not normally make any assessment of the refit which his vehicles are earning for him.
In the normal way, e would no doubt hire a vehicle to take the place of the ne damaged, and would claim for his expenditure of hi •, less, again, such savings as he would have made by ot having to buy petrol, oil, tyres or effect repairs, but e case which was put before me the other day did not Dffer that simple way out.
What It Would Cost the Ancillary User to Hire
Perhaps one way woe d be to estimate what the ancillary user would have to pa for the hire of a 21-tonner. • On to-day's figures, reckon ng on 400 miles per week, a fair charge would be about £18. Assuming that he is willing to pay £18 for the h. of a vehicle, it is a reasonable assumption that the s rvice rendered is worth not less than £20 to him, an that represents, in this case, a total lois of earnings. From that he would, like my haulier friend, have t subtract his savings on petrol, which might be £3 5s.; On Oil, say, 5s.; tyres, £1 10s.; repairs, say, 15s. The total is £5 15s., so that his claim would amount to £14 s. per week.
Whether a claim so ssessed would carry weight in the courts I do not know. I should imagine that he would be called upon to prod ce, from his books, some evidence of actual loss of turno r or of absence or loss-this happened to be a building ontractor-due to delay in getting on with some work, a d that his claim would be based upon data of that kin however, in these a ides I am more particularly concerned with hauliers, nd so far as the haulier is concerned, if he has avail ble some indisputable figures for weekly earnings and ac nal expenditure, it is not difficult to make.out a claim hich will stand.
The trouble is, of urse, that so few hauliers, even to-day, have such figu es available for presentation.